Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____São Paulo, February 12th 2007 CPFL Energia S.A. (Bovespa: CPFE3 and NYSE: CPL), announces the 4Q06 results. The following financial and operational information except when otherwise specified, is presented in a consolidated form and in accordance with Company Legislation. Comparisons are relative to 4Q05 unless otherwise stated.
4Q06 Highlights
(1) EBITDA is calculated as net income before taxes, financial expenses, income, depreciation, amortization and pension fund contributions plus adjustments for extraordinary items and non-recurring transactions.
Teleconference in Portuguese with Simultaneous Translation in English (Bilingual Q&A)
Tuesday, February 13th 2007 15:00 (SP), 12:00 (US-ET)
Portuguese: (11) 2101-4848
English: (1-973) 935-8757
Password: CPFL or 8391596
Webcast: http://ri.cpfl.com.br
1) Company Structure
CPFL Energia is a holding company with stock participations, whose results depend directly on the results of the controlled companies, the principal of which are: CPFL Paulista (100%), CPFL Piratininga (100%), CPFL Geração (100%) e CPFL Brasil (100%).
Note: (1) market included 0.01% of others.
1.1) Stockholding Alteration
Acquisition of Companhia Luz e Força Santa Cruz
On October 2nd 2006, CPFL Energia acquired 99.99% of the Companhia Luz e Força Santa Cruz. Santa Cruz is a public service concessionaire for the distribution of electric power operating in 24 municipalities in São Paulo State and 3 in the State of Paraná. The concession occupies an area of 11,849.5 km2, serving more than 161 thousand consumers, with a national market share of 0.3% . This acquisition raises CPFL Energias market share to 12.7% ..
In 2005 Santa Cruz sold 746 GWh, of power, generating net revenue of R$ 154 million, EBITDA of R$ 30 million and net income R$ 14 million. In the first half-year of 2006 net revenue reached R$ 91 million, EBITDA R$ 18 million and net income reached R$ 10 million.
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This R$ 203 million acquisition is aligned with the CPFL Energia strategy which foresees successive steps towards the consolidation of the power distribution sector in the country and will permit an adequate return on the current business portfolio for the CPFL Group. The following are the financial indicators implicit in this acquisition: considering indicators for 2005 for the two companies, we obtain indexes EV/EBITDA and P/VPA of 7.1x and 2.4x for Santa Cruz, against 8.7x and 2.8x for CPFL Energia, respectively.
Besides the acquisition of Santa Cruz, in 2006 CPFL Energia also acquired 32.7% of RGE (R$ 383 million) and 11% of the Foz do Chapecó hydroelectric facility (R$ 9 million), which commits CPFL to an additional investment of R$ 230 million. With these acquisitions CPFL will have invested R$ 825 million.
2) STOCK MARKET PERFORMANCE 2006
With the conclusion of the shareholding reorganization of VBC Energia S.A. in December 2006 and the resultant exit of Bradespar from the controlling block, CPFL Energia attained 27.08% free float.
In 2006, CPFL shares appreciated 16.0% on BOVESPA and 28.6% on the NYSE, closing the year quoted at R$ 30.00 and US$ 41.38, respectively
Since the IPO, the return on investment was 99.3% on BOVESPA and 127.7% on the NYSE.
The daily average trading volume in 2006 was R$ 17.3 million; R$ 9.1 million on BOVESPA and R$ 8.1 million on the NYSE. Compared to the daily average in 2005, this represents an increase of 145.8% .
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3) DIVIDENDS AND INTEREST ON CAPITAL INVESTED
The board proposed the distribution of R$ 1,334 million, or R$ 2.78 per share, in dividends, the equivalent of the net income balance for the year, less the legal reserve of 5%.
Taking into account the R$ 612 million paid in 1H06, the amount to be paid will be R$ 722 million, or R$ 1.50 per share.
The annual dividend yield for 2006, calculated from the median price of the shares over the period (R$ 29.15) is 9.6% . When calculated from the closing price (R$ 30.00), the annual dividend yield is 9.8% .
This amount is well above the CPFL Energia dividend policy which states that income distribution in the form of dividends and/or interest on own capital (JCP), should be at minimum 50% of adjusted net income distributed half-yearly.
4) ENERGY SALES
4.1) Total Energy Sales
Energy Sales - GWh | ||||||
4Q06 | 4Q05 | Var. | ||||
Captive Market | 8,326 | 7,863 | 5.9% | |||
Free Market | 2,397 | 2,288 | 4.8% | |||
Total | 10,723 | 10,151 | 5.6% |
In 4Q06, sales of energy from the CPFL Group through the distribution and commercialization segments totaled 10,723 GWh, an increase of 5.6% . This increase is largely due to the acquisition of 32.7% of RGE, without which, the growth would have been 0.2% .
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Sales to the captive market totaled 8,326 GWh, equivalent to a 5.9% increase. This increase is also due to a large extent to the purchase of RGE, without which there would have been a reduction of 1.1% .
In 4Q06 sales to the free market were 2,397 GWh, an increase of 4.8% . This increase can be attributed to the winning over of captive customers by the group commercializing sector that migrated to the free market and also to the increase in consumption from CPFL Brasil base customers.
4.2) Captive Market
Captive Market - GWh | ||||||
4Q06 | 4Q05 | Var. | ||||
Residential | 2,470 | 2,243 | 10.1% | |||
Industrial | 2,827 | 2,893 | -2.3% | |||
Commercial | 1,525 | 1,378 | 10.7% | |||
Rural | 527 | 469 | 12.3% | |||
Others | 976 | 880 | 11.0% | |||
Total | 8,326 | 7,863 | 5.9% |
The captive market saw the evolution of the following classes: industrial, residential and commercial, although this evolution was also influenced by the acquisition of 32.7% of RGE:
Discounting the effect of the RGE purchase, the industrial class suffered a reduction of 9.5% and the residential and commercial classes showed gains of 4.5% and 5.5%, respectively.
4.3) Sales by consumer class(1)
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5) ECONOMIC-FINANCIAL PERFORMANCE
CONSOLIDATED INCOME STATEMENT | 4Q06 | 4Q05 | Var. | |||
- CPFL ENERGIA (R$ Thousands) | ||||||
OPERATING REVENUES | 3,279,887 | 2,891,256 | 13.4% | |||
Net Operating Revenues | 2,394,625 | 2,060,172 | 16.2% | |||
Cost of Electric Energy | (1,148,666) | (990,554) | 16.0% | |||
Operating Cost/Expenses | (640,780) | (674,681) | -5.0% | |||
Income from Electric Energy Services | 605,179 | 394,937 | 53.2% | |||
EBITDA | 684,029 | 488,583 | 40.0% | |||
Financial Income (Expense) | (118,618) | (141,437) | -16.1% | |||
Operating Income | 486,561 | 253,500 | 91.9% | |||
Income Before Taxes | 479,336 | 254,873 | 88.1% | |||
NET INCOME | 345,354 | 380,717 | -9.3% | |||
5.1) Operating revenue
Gross operating revenue in 4Q06 reached R$ 3,280 million, representing growth of 13.4%, while net operating revenue showed growth of 16.2% (R$ 334 million).
The main contributing factors to this growth in net revenue were:
(i) | Increase in total energy sales by 5.6% together with the distributor tariff readjustment (R$ 354 million) |
|
(ii) | Increase of 37.6% (R$ 52 million) in TUSD revenue |
|
(iii) | Cessation of ANEEL emergency charges (R$ 39 million) |
In 2006, gross operating revenue reached R$ 12,227 million, representing growth of 12.1% .
5.2) Cost of electric power
The cost of power, comprising of the purchase cost plus charges for the use of the system totaled R$ 1,149 million in 4Q06, an increase of 16.0% (R$ 158 million):
(i) | Increase of 9.2% (R$ 85 million) in the cost of purchased energy due mainly to higher volume. |
|
(ii) | Increase of R$ 41 million owing to the accounting costs of surplus energy. |
|
(iii) | Increase of R$ 40 million in the amount relating to the net effect of the amortization and deferment of CVA. |
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(iv) | Increase of R$ 14 million in Pis and Cofins credits due to higher volume. |
5.3) Operating Costs
Operating costs in 4Q06 were R$ 641 million registering a reduction of 5.0% (R$ 34 million). The main causes for this decrease are:
(i) PMSO: The main variations in this item were caused by the following factors:
- | Expenditure on personnel which registered an increase of 25.6% (R$ 21 million) in 4Q06, due to, among other factors, the operational start-up of the Barra Grande Hydroelectric Plant, the 32.7% acquisition of RGE and the annual payroll
increase. |
|
- | Expenditure on outsourced services which increased 16.1% (R$ 12 million) during the period, due mainly to the start-up of the Barra Grande hydroelectric facility (BAESA) and the 32.7% acquisition of RGE |
|
- | Expenditure on other operating costs which decreased by 52.3% (R$ 108 million) over the period due to non-occurrence in 4Q06 of RTE adjustment (R$ 92 million) in 4Q05. |
Note: PMSO consider personnel, materials, outsourced services and others.
(ii) Fuel Consumption Account (CCC) and Energy Development Account (CDE): expenses incurred with CCC and CDE increased 28.4% and 22.5% respectively (R$ 50 million). It should be emphasized that these costs are non-manageable, as they are charges defined by ANEEL.
Private Pension Fund expenditure which fell by 108.9% (R$ 24 million) also contributed to the reduction in operating costs. This item, which represented an expense R$ 22 million in 4Q05 turned into a R$ 2 million revenue in 4Q06. This variation is basically due to the Actuarial Report Revision.
5.4) EBITDA
Based on the factors described above, CPFL Energia EBITDA in 4Q06 was R$ 684 million, registering an increase of 40.0% (R$ 195 million).
For the year 2006, EBITDA was R$ 2,789 million, registering an increase of 31.6% (R$ 669 million).
5.5) Financial Result
Although the financial result in 4Q06 was negative by R$ 119 million, it was an improvement of 16.1% on the negative result of R$ 141 million of 4Q05. An explanation for this lies in the following:
(i) | Financial Revenue: A reduction of 45.6% (R$ 95 million), falling from R$ 208 million in 4Q05 to R$ 113 million in 4Q06, mainly as a result of: |
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- | The non-occurrence in 4Q06 of the change in asset remuneration methodology of RTE and Energia Livre (R$ 62 million) occurred in 4Q05 |
|
- | Other effects, including monetary and foreign exchange adjustment (R$ 19 million) and remuneration of CVA and Parcela A (R$ 13 million) |
(ii) Financial Expenses: reduction of 33.7% (R$ 118 million), falling from R$ 350 million in 4Q05 to R$ 232 million in 4Q06, due mainly to:
- | The non-payment in 4Q06 of interest on own capital (JCP) paid in 4Q05 (R$ 109 million) |
|
- | Reduction in the cost of debt (R$ 34 million), mainly as a result of the change in debt profile, combined with falls in the interest rate (CDI and TJLP) in the period |
5.6) Net Income
Net Income in 4Q06, was R$ 345 million, a reduction of 9.3% (R$ 35 million).
For the year 2006, net income was R$ 1,404 million, an increase of 37.5% (R$ 383 million).
6) Debt
CPFL Energia debt stood at R$ 5,168 million in 4Q06, an increase of 3.8%, compared to the previous year. Although the debt has increased in nominal terms, its cost has fallen from 13.9% p.a. in 4Q05 to 13.4% p.a. in 4Q06, due to the fall in the CDI (18.2% to 15.2%) and the TJLP (9.8% to 7.9%) during the period, partially offset by the rise of the IGP-M/IGP-DI (1.2% to 3.8%) .
The debt increase stems mainly from the net effect of the incorporation of the debt installment of RGE after the stock acquisition of 32.7%, in the amount of R$ 224 million.
The following factors also contributed to the fluctuation of debt:
(i) | Liquidation of Floating Rate Notes (R$ 232 million) and 1st emission of CPFL Paulista debentures (R$ 805 million) |
|
(ii) | Emission of debentures by CPFL Piratininga (R$ 400 million) and CPFL Paulista (R$ 640 million); contracting of debt linked to CDI by RGE (R$ 140 million); and BNDES loans for CPFL Paulista, CPFL Piratininga and generation projects (R$ 334
million) |
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In summary of the above, one can observe the change in profile of financial debt, demonstrated by the increase in debt linked to CDI (27% to 41%) and TJLP (28% to 31%), and by the reduction in debt linked to IGP-M/IGP-DI (39% to 22%).
LOANS AND FINANCINGS - 4Q06 (R$ Thousands) | ||||||||
PRINCIPAL | ||||||||
CHARGES | SHORT TERM | LONG TERM | TOTAL | |||||
LOCAL CURRENCY | ||||||||
BNDES - Repowering | 161 | 4,104 | 23,813 | 28,078 | ||||
BNDES - Investment | 10,995 | 203,374 | 1,251,703 | 1,466,072 | ||||
BNDES - RTE, Parcel "A" and Free Energy | 787 | 338,163 | 124,369 | 463,319 | ||||
FIDC | 7,086 | 4,953 | - | 12,039 | ||||
Furnas Centrais Elétricas S.A. | - | - | 124,404 | 124,404 | ||||
Financial Institutions | 4,788 | 13,915 | 304,829 | 323,532 | ||||
Others | 548 | 34,349 | 21,127 | 56,024 | ||||
Subtotal | 24,365 | 598,858 | 1,850,245 | 2,473,468 | ||||
FOREIGN CURRENCY | ||||||||
IDB | 886 | 2,656 | 75,472 | 79,014 | ||||
Financial Institutions | 7,158 | 56,602 | 547,281 | 611,041 | ||||
Subtotal | 8,044 | 59,258 | 622,753 | 690,055 | ||||
DEBENTURES | ||||||||
CPFL Paulista | 21,789 | - | 903,830 | 925,619 | ||||
CPFL Piratininga | 27,878 | - | 400,000 | 427,878 | ||||
RGE | 9,336 | 23,000 | 207,000 | 239,336 | ||||
SEMESA | 2,923 | 136,252 | 230,347 | 369,522 | ||||
BAESA | 4,252 | - | 38,268 | 42,520 | ||||
Subtotal | 66,178 | 159,252 | 1,779,445 | 2,004,875 | ||||
TOTAL | 98,587 | 817,368 | 4,252,443 | 5,168,398 | ||||
It should be emphasized that R$ 4,252 million, or 82.3% of the CPFL Energia debt is considered long term and R$ 916 million, or 17.7% of the total is considered short term.
In 4Q06, the adjusted net debt increased 19.4% as calculated from the total debt (the sum of loans, financing, derivatives and pension fund debt), excluding regulatory assets / CVA and cash receivables, reaching a total of R$ 4.416 million. This variation is a result of the increase of R$ 141 million in total debt and the reduction of R$ 178 million and R$ 399 million in the items, regulatory assets/liabilities and receivables respectively. Importantly, the ratio debt//EBITDA fell to 1.6x.
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R$ Thousands | 4Q06 | 4Q05 | Var. | |||
Total Debt (1) | (6,103,517) | (5,962,404) | 2.4% | |||
+ Regulatory Assets and Liabilities | 1,057,247 | 1,235,566 | -14.4% | |||
+ Available Funds | 630,250 | 1,029,241 | -38.8% | |||
= ADJUSTED NET DEBT | (4,416,020) | (3,697,597) | 19.4% |
7) INVESTMENTS
In 4Q06, Investments of R$ 241 million were made in maintenance and business expansion, of which R$ 168 million was channeled to distribution, R$ 2 million to commercialization and R$ 70 million to generation.
Among CPFL Energias main investments, we highlight the following:
Over the year 2006, R$ 797 million was invested in the maintenance and expansion of business, of which R$ 527 million was for distribution, R$ 4 million for commercialization and R$ 266 million for generation.
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8) CASH FLOW
The table below shows the evolution of cash during 2005 and 2006, although the accompanying comments refer solely to the cash flow situation in 2006:
Consolidated | ||||
12/31/2006 | 12/31/2005 | |||
Initial Cash Balance | 678,780 | 499,838 | ||
Net Income | 1,404,096 | 1,021,278 | ||
Consumers, Concessionaries and Licensees | 265,306 | 174,171 | ||
Suppliers | (90,378) | 251 | ||
Cash Investments | 260,575 | (32,575) | ||
Others | 458,517 | 425,164 | ||
894,020 | 567,011 | |||
Investment Activities | ||||
Acquisition of Stake | (593,000) | (5,424) | ||
Acquisition of Property, Plant and Equipment | (797,235) | (626,537) | ||
Others | 139,851 | (112,459) | ||
(1,250,384) | (744,420) | |||
Financing Activities | ||||
Loans, Financing and Debentures | 2,124,163 | 1,124,359 | ||
Principal Amortization of Loans, Financing and Debentures | (2,220,076) | (1,230,116) | ||
Dividend and Interest on Own Capital Paid | (1,090,259) | (559,170) | ||
Others | 24 | - | ||
(1,186,148) | (664,927) | |||
Generation of Cash Flow for the Period | (138,416) | 178,942 | ||
Final Cash Balance | 540,364 | 678,780 | ||
At the years closing, the cash balance reached R$ 540 million, the equivalent of a reduction of 20.4% (R$ 138 million) relative to the starting balance.
Besides the cash generated by company activities, highlighted below are other factors which contributed to the cash flow variation:
(i) | Acquisitions of stockholdings in the amount of R$ 593 million, such as the purchase of 32.7% of RGE, 11% of Foz do Chapecó Hydroelectric Facility and 99.99% of Santa Cruz. |
|
(ii) | Asset acquisitions in the amount of R$ 793 million (already presented in Investment item) |
|
(iii) | Amortization of the principal of loans, financing, and debentures, exceeding the inlets by R$ 96 million. |
|
(iv) | Payment of income with reference to 2H05 and 1H06 (R$ 1,090 million) |
The evolution of cash flow was partially influenced by the sale of stockholdings in Companhia de Gás de São Paulo (Comgás).
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9) PERFORMANCE OF THE BUSINESS SEGMENTS
9.1) Distribution
CONSOLIDATED INCOME STATEMENT | 4Q06 | 4Q05 | Var. | |||
- DISTRIBUTION (R$ Thousands) | ||||||
OPERATING REVENUES | 3,019,814 | 2,657,302 | 13.6% | |||
Net Operating Revenues | 2,169,392 | 1,866,571 | 16.2% | |||
Cost of Electric Energy | (1,133,929) | (966,677) | 17.3% | |||
Operating Cost/Expenses | (592,762) | (639,256) | -7.3% | |||
Income from Electric Energy Services | 442,701 | 260,638 | 69.9% | |||
EBITDA | 500,916 | 352,872 | 42.0% | |||
Financial Income (Expense) | (122,184) | (83,810) | 45.8% | |||
Operating Income | 320,517 | 176,828 | 81.3% | |||
Income Before Taxes | 313,875 | 178,243 | 76.1% | |||
NET INCOME | 266,509 | 254,652 | 4.7% | |||
Operating Revenue
In 4Q06, gross revenue was R$ 3,020 million, an increase of 13.6% (R$ 363 million). Net operating revenue showed growth of 16.2% (R$ 303 million).
The main contributing factors towards growth in net revenue were:
(i) | Increase in sales to captive clients by 5.9%, coupled with the distributor tariff readjustment (R$ 310 million) |
|
(ii) | Increase of 38.2% (R$ 53 million) in TUSD revenue. |
|
(iii) | Cessation of ANEEL emergency charges. (R$ 39 million). |
Electric Power Costs
The total costs related to electric power, comprised of the purchase of electric power and charges for the use of the system, in 4Q06 were R$ 1,134 million, an increase of 17.3%:
(i) | Increase of 10.8% (R$ 96 million) in the cost of purchased power due mainly to the increased volume. |
|
(ii) | Increase of R$ 41 million due to energy surplus accounting methods. |
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(iii) | Reduction of R$ 40 million of the value relating to the net affect of amortization and the deferment of CVA. |
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(iv) | Increase of R$ 16 million from Pis and Cofins credit due to higher volume. |
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Operating Costs
Operating costs in 4Q06 were R$ 593 million, a reduction of 7.3% (R$ 46 million). The principal causes of this reduction were:
(i) PMSO: The main variations in this item were due to the following factors:
- | Expenditure on personnel, which increased 21.5% (R$ 17 million) in 4Q06, mainly due to the 32.7% acquisition of RGE and the annual payroll increase. | |
- | Expenditure on other operating costs which decreased 54.3% (R$ 109 million) over the period, due to non-occurrence in 4Q06 of RTE adjustment (R$ 88 million) in 4Q05 |
(ii) Fuel Consumption Account (CCC) and Energy Development Account (CDE): expenses incurred with CCC and CDE increased 28.4% and 22.5% respectively (R$ 50 million). It should be emphasized that these costs are non-manageable, as they are charges defined by ANEEL.
Private Pension Fund expenditure which fell by 108.8% (R$ 24 million) also contributed to the reduction in operating costs. This item, which in 4Q05 represented an expenditure of R$ 22 million, in 4Q06 turned into R$ 2 million revenue. This variation is basically due to the Actuarial Report Revision.
EBITDA
Based on the factors described above, EBITDA in 4Q06, was R$ 501 million, registering an increase of 42.0% (R$ 148 million).
Financial Result
In 4Q06, the financial result was negative by R$ 122 million, representing a fall of 45.8% relative to the already negative result of R$ 84 million in 4Q05. The items that help explain this variation are:
(i) Financial Revenue: reduction of 44.7% (R$ 82 million), falling from R$ 183 million in 4Q05 to R$ 101 million in 4Q06, mostly due to:
- | Non-occurrence in 4T06 of the non-recurring effect of R$ 62 million applied in 4Q05, due to the change in the methodology of remuneration of assets of RTE and Energia Livre |
|
- | Other effects, including monetary and foreign exchange adjustment (R$ 13 million) and remuneration of CVA and Parcela A (R$ 13 million). |
(ii) Financial Costs: reduction of 16.3% (R$ 44 million), dropping from R$ 267 million in 4Q05 to R$ 224 million in 4Q06, mainly due to:
- | Reduction of 34.4% (R$ 32 million) on interest on own capital (JCP), which fell from R$ 92 million in 4Q05 to R$ 61 million in 4Q06 |
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- | Reduction in the cost of debt (R$ 34 million), mainly as a result of the change in debt profile, combined with falls in the interest rate (CDI and TJLP) in the period |
Net Income
Net income in 4Q06, was R$ 267 million, an increase of 4.7% (R$ 12 million).
IRT of CPFL Piratininga
On October 23rd 2006, the electricity tariffs of CPFL Piratininga were readjusted on average by 10.79% . This readjustment was applied in a differentiated form to each class of consumer. For small scale residential and commercial customers connected to low voltage (less than 2.3 kV), the average rate was 6.96% . For high voltage consumers, which include medium and large industries, the average readjustment was 14.08% . The readjustment is valid for the entire CPFL Piratininga market of 1.3 million customers.
9.2) Commercialization
CONSOLIDATED INCOME STATEMENT | 4Q06 | 4Q05 | Var. | |||
- CPFL BRASIL (R$ Thousands) | ||||||
OPERATING REVENUES | 476,357 | 407,193 | 17.0% | |||
Net Operating Revenues | 409,070 | 351,811 | 16.3% | |||
EBITDA | 62,559 | 60,957 | 2.6% | |||
NET INCOME | 41,290 | 41,466 | -0.4% | |||
Operating Revenue
In 4Q06, gross revenue was R$ 476 million, an increase of 17.0% (R$ 69 million). This increase is owed basically to the 4.8% increase in sales volume.
EBITDA
In 4Q06, EBITDA was R$ 63 million, an increase of 2.6% (R$ 2 million).
Net Income
Net income in 4Q06, was R$ 41 million, a reduction of 0.4% (R$ 0.2 million).
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9.3) Generation
CONSOLIDATED INCOME STATEMENT | 4Q06 | 4Q05 | Var. | |||
- GENERATION (R$ Thousands) | ||||||
OPERATING REVENUES | 143,897 | 116,101 | 23.9% | |||
Net Operating Revenues | 143,117 | 104,429 | 37.0% | |||
Cost of Electric Energy | (6,497) | (3,174) | 104.7% | |||
Operating Cost/Expenses | (27,368) | (24,167) | 13.2% | |||
Income from Electric Energy Services | 109,252 | 77,088 | 41.7% | |||
EBITDA | 119,659 | 86,664 | 38.1% | |||
Financial Income (Expense) | (35,394) | (33,004) | 7.2% | |||
Operating Income | 73,858 | 44,084 | 67.5% | |||
Income Before Taxes | 73,634 | 44,043 | 67.2% | |||
NET INCOME | 47,822 | 30,107 | 58.8% | |||
Operating Revenue
In 4Q06, gross revenue was R$ 144 million, an increase of 23.9% (R$ 28 million). This increase is mainly due to the start-up of commercial operations of the Barra Grande hydroelectric plant (BAESA) in November 2005, which contributed with R$ 31 millions and 118 GWh.
Cost of Electric Power Service
The cost of electric power service in 4Q06 was R$ 6 million, an increase of 104.7% (R$ 3 million). This rise is due mainly to the acquisitions made by Ceran (R$ 2 million) and start of The BAESA operations which contributed R$ 1 million.
Operating Costs
Operating costs in 4Q06 reached R$ 27 million, an increase of 13.2% (R$ 3 million). This rise is basically due to the variations in the PMSO: (i) Increase of 73.3% (R$ 2 million) on personnel costs from the Baesa operational start-up; (ii) Increase of 13.4% (R$ 1 million) on outsourced service spending; and (iii) reduction of 26.2% (R$ 1 million) on expenditure on other operating costs.
EBITDA
Based on the factors described above, EBITDA, in 4Q06, reached R$ 120 million, rising 38.1% (R$ 33 million).
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Financial Result
In 4Q06, the financial result was R$ 35 million negative, representing an increase of 7.2% (R$ 2 million), due mainly to the reduction of 64.8% (R$ 9 million) in financial revenue, resulting from the fall in income from financial investments, offset by the reduction in the cost of debt (R$ 7 million), due to the amortizations made in the period.
Net Income
Net Income in 4Q06, was R$ 48 million, an increase of 58.8% (R$ 18 million).
Status of Generation Projects
Campos Novos Hydroelectric Facility
CPFL Energia informed the market on February 5th 2007, that the Campos Novos hydroelectric facility received authorization from ANEEL for the commercial operation of its first turbine, which will supply 91% (342 median MW) of the plants secured power. By April 2007 the remaining turbines should be in operation. The filling of the reservoir was concluded on January 31st 2007.
CPFLS participation in the undertaking is 48.72%, which represents an installed capacity of 428.8 MW and secured power of 184.1 median MW.
Foz do Chapecó Hydroelectric Facility
CPFL Energia also informed the market that in December 2006, work on the Foz do Chapecó hydroelectric facility had started.
CPFLS participation in the undertaking is 51%, which represents an installed capacity of 436.1 MW and secured power of 220.3 median MW. Commercial operation is forecast for 2010.
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Investor Relations
Tel.: (55) (19) 3756-6083
Fax: (55) (19) 3756-6089
E-mail:ri@cpfl.com.br
Site: http://ri.cpfl.com.br
CPFL Energia is the largest publicly-held group in the Brazilian electric sector, active in the distribution, commercialization and generation of electric power. CPFL is the only company in the Brazilian electric sector to simultaneously trade shares on the Novo Mercado Bovespa and on the New York Stock Exchange with ADRs level III. The company strategy is focused on operational efficiency and synergical business growth with financial discipline, social responsibility and differentiated corporate governance.
Page 17 of 22
Statement of Assets
(R$ thousands)
Consolidated | ||||
ASSETS | 12/31/06 | 12/31/05 | ||
CURRENT ASSETS | ||||
Cash and Banks | 630,250 | 1,029,241 | ||
Consumers, Concessionaries and Licensees | 2,124,968 | 1,800,556 | ||
Dividends and Interest on Equity | 16,755 | - | ||
Financial Investments | 28,615 | 22,923 | ||
Recoverable Taxes | 170,953 | 188,772 | ||
Allowance for Doubtful Accounts | (99,609) | (54,361) | ||
Prepaid Expenses | 191,239 | 149,352 | ||
Deferred Taxes | 188,942 | - | ||
Materials and Supplies | 16,008 | 9,203 | ||
Deferred Tariff Cost Variations | 334,353 | 486,384 | ||
Derivative Contracts | - | 3,644 | ||
Other Credits | 93,254 | 134,577 | ||
3,695,728 | 3,770,291 | |||
NONCURRENT ASSETS | ||||
Consumers, Concessionaries and Licensees | 165,183 | 530,423 | ||
Depósitos Judiciais | 81,846 | 62,559 | ||
Financial Investments | 103,901 | 108,531 | ||
Recoverable Taxes | 103,049 | 77,324 | ||
Prepaid Expenses | 28,769 | 38,187 | ||
Deferred Taxes | 908,605 | 1,118,441 | ||
Deferred Tariff Cost Variations | 512,678 | 510,277 | ||
Other Credits | 142,057 | 137,892 | ||
2,046,088 | 2,583,634 | |||
PERMANENT ASSETS | ||||
Investments | 3,092,648 | 3,095,162 | ||
Property, Plant and Equipment | 5,953,930 | 4,841,766 | ||
Special Obbligation Linked to Concession | (791,387) | (640,997) | ||
Deferred Charges | 51,774 | 40,045 | ||
8,306,965 | 7,335,976 | |||
TOTAL ASSETS | 14,048,781 | 13,689,901 | ||
Page 18 of 22
Statement of Liabilities
(R$ thousands)
Consolidated | ||||
LIABILITIES | 12/31/06 | 12/31/05 | ||
CURRENT LIABILITIES | ||||
Suppliers | 854,161 | 782,233 | ||
Accrued Interest on Debts | 29,859 | 47,931 | ||
Accrued Interest on Debentures | 66,178 | 94,948 | ||
Loans and Financing | 658,116 | 1,198,015 | ||
Debentures | 159,252 | 273,492 | ||
Employee Pension Plans | 86,715 | 121,048 | ||
Regulatory Charges | 105,013 | 30,945 | ||
Taxes and Social Contributions | 522,758 | 474,960 | ||
Dividends and Interest on Equity | 732,518 | 489,263 | ||
Accrued Liabilities | 53,998 | 29,490 | ||
Deferred Tariff Gains Variations | 162,350 | 262,764 | ||
Derivative Contracts | 50,664 | 39,928 | ||
Other Accounts Payable | 303,693 | 294,265 | ||
3,785,275 | 4,139,282 | |||
LONG-TERM LIABILITIES | ||||
Suppliers | - | 201,982 | ||
Accrued Interest on Debts | 2,550 | - | ||
Loans and Financing | 2,472,998 | 1,807,465 | ||
Debentures | 1,779,445 | 1,556,599 | ||
Employee Pension Plans | 773,646 | 793,343 | ||
Taxes and Social Contribution Payable | 39,741 | 31,110 | ||
Reserve for Contingencies | 103,711 | 214,969 | ||
Deferred Tariff Gains Variations | 71,069 | 11,976 | ||
Derivative Contracts | 24,094 | 29,635 | ||
Other Accounts Payable | 127,941 | 107,492 | ||
5,395,195 | 4,754,571 | |||
NON-CONTROLLING SHAREHOLDERS' INTEREST | 2,034 | - | ||
SHAREHOLDERS EQUITY | ||||
Capital | 4,734,790 | 4,734,790 | ||
Shares on Treasury | - | (8) | ||
Capital Reserves | 16 | - | ||
Profit Reserves | 131,471 | 61,266 | ||
4,866,277 | 4,796,048 | |||
TOTAL LIABILITIES | 14,048,781 | 13,689,901 | ||
Page 19 of 22
Income Statement
(R$ thousands)
Consolidated | Variation | |||||||
4Q06 | 4Q05 | |||||||
OPERATING REVENUES | ||||||||
Eletricity Sales to Final Consumers | 2,929,045 | 2,575,451 | 353,594 | 13.73% | ||||
Eletricity Sales to Distributors | 124,058 | 136,010 | (11,952) | -8.79% | ||||
Other Operating Revenues | 226,784 | 179,795 | 46,989 | 26.13% | ||||
3,279,887 | 2,891,256 | 388,631 | 13.44% | |||||
DEDUCTIONS FROM OPERATING REVENUES | (885,262) | (831,084) | (54,178) | 6.52% | ||||
NET OPERATING REVENUES | 2,394,625 | 2,060,172 | 334,453 | 16.23% | ||||
COST OF ELETRIC ENERGY SERVICES | ||||||||
Eletricity Purchased for Resale | (954,410) | (802,628) | (151,782) | 18.91% | ||||
Eletricity Network Usage Charges | ||||||||
(194,256) | (187,926) | (6,330) | 3.37% | |||||
(1,148,666) | (990,554) | (158,112) | 15.96% | |||||
Operating Costs/Expenses | ||||||||
Personnel | (103,769) | (82,640) | (21,129) | 25.57% | ||||
Material | (19,912) | (13,500) | (6,412) | 47.50% | ||||
Outsourced Services | (89,894) | (77,441) | (12,453) | 16.08% | ||||
Other Operating Costs | (99,047) | (207,495) | 108,448 | -52.27% | ||||
Fuel Consumption Account - CCC | (146,029) | (113,702) | (32,327) | 28.43% | ||||
Energy Development Account - CDE | (95,975) | (78,366) | (17,609) | 22.47% | ||||
Employee Pension Plans | 1,989 | (22,410) | 24,399 | -108.88% | ||||
Depreciation and Amortization | (88,143) | (79,127) | (9,016) | 11.39% | ||||
Merged Goodwill Amortization | - | - | - | |||||
(640,780) | (674,681) | 33,901 | -5.02% | |||||
EBITDA | 684,029 | 488,583 | 195,446 | 40.00% | ||||
INCOME FROM ELETRIC ENERGY SERVICE | 605,179 | 394,937 | 210,242 | 53.23% | ||||
FINANCIAL INCOME (EXPENSE) | ||||||||
Financial Income | 113,445 | 208,375 | (94,930) | -45.56% | ||||
Financial Expenses | (232,063) | (240,517) | 8,454 | -3.51% | ||||
Interest on Equity | - | (109,295) | 109,295 | -100.00% | ||||
(118,618) | (141,437) | 22,819 | -16.13% | |||||
OPERATING INCOME | 486,561 | 253,500 | 233,061 | 91.94% | ||||
NONOPERATING INCOME (EXPENSE) | ||||||||
Nonoperating Income | 2,370 | 2,574 | (204) | -7.93% | ||||
Nonoperating Expenses | (9,595) | (1,201) | (8,394) | 698.92% | ||||
(7,225) | 1,373 | (8,598) | -626.22% | |||||
INCOME BEFORE TAXES ON INCOME | 479,336 | 254,873 | 224,463 | 88.07% | ||||
Social Contribution | (29,258) | 4,993 | (34,251) | -685.99% | ||||
Income Tax | (96,506) | 28,959 | (125,465) | -433.25% | ||||
INCOME BEFORE EXTRAORDINARY ITEM AND NON- | ||||||||
CONTROLLING SHAREHOLDERS' INTEREST | ||||||||
353,572 | 288,825 | 64,747 | 22.42% | |||||
Non-Controlling Shareholders' Interest | (79) | (9,264) | 9,185 | -99.15% | ||||
Extraordinary Item net of Tax Effects | (8,139) | (8,139) | - | 0.00% | ||||
Reversal of Interest on Equity | - | 109,295 | (109,295) | -100.00% | ||||
NET INCOME (EXPENSE) | 345,354 | 380,717 | (35,363) | -9.29% | ||||
Page 20 of 22
Income Statement Consolidated (Pro-forma)
(R$ thousands)
Consolidated | Variation | |||||||
4Q06 | 4Q05 | |||||||
OPERATING REVENUES | ||||||||
Eletricity Sales to Final Consumers | 2,784,421 | 2,473,525 | 310,896 | 12.57% | ||||
Eletricity Sales to Distributors | 17,376 | 12,244 | 5,132 | 41.91% | ||||
Other Operating Revenues | 218,017 | 171,533 | 46,484 | 27.10% | ||||
3,019,814 | 2,657,302 | 362,512 | 13.64% | |||||
DEDUCTIONS FROM OPERATING REVENUES | (850,422) | (790,731) | (59,691) | 7.55% | ||||
NET OPERATING REVENUES | 2,169,392 | 1,866,571 | 302,821 | 16.22% | ||||
COST OF ELETRIC ENERGY SERVICES | ||||||||
Eletricity Purchased for Resale | (941,517) | (779,769) | (161,748) | 20.74% | ||||
Eletricity Network Usage Charges | ||||||||
(192,412) | (186,908) | (5,504) | 2.94% | |||||
(1,133,929) | (966,677) | (167,252) | 17.30% | |||||
Operating Costs/Expenses | ||||||||
Personnel | (93,774) | (77,159) | (16,615) | 21.53% | ||||
Material | (18,328) | (12,501) | (5,827) | 46.61% | ||||
Outsourced Services | (71,560) | (65,136) | (6,424) | 9.86% | ||||
Other Operating Costs | (91,675) | (200,503) | 108,828 | -54.28% | ||||
Fuel Consumption Account - CCC | (146,029) | (113,702) | (32,327) | 28.43% | ||||
Energy Development Account - CDE | (95,975) | (78,366) | (17,609) | 22.47% | ||||
Employee Pension Plans | 1,942 | (22,116) | 24,058 | -108.78% | ||||
Depreciation and Amortization | (73,607) | (67,735) | (5,872) | 8.67% | ||||
Merged Goodwill Amortization | (3,756) | (2,038) | (1,718) | 84.30% | ||||
(592,762) | (639,256) | 46,494 | -7.27% | |||||
EBITDA | 500,916 | 352,872 | 148,044 | 41.95% | ||||
INCOME FROM ELETRIC ENERGY SERVICE | 442,701 | 260,638 | 182,063 | 69.85% | ||||
FINANCIAL INCOME (EXPENSE) | ||||||||
Financial Income | 101,423 | 183,397 | (81,974) | -44.70% | ||||
Financial Expenses | (163,107) | (174,958) | 11,851 | -6.77% | ||||
Interest on Equity | (60,500) | (92,249) | 31,749 | -34.42% | ||||
(122,184) | (83,810) | (38,374) | 45.79% | |||||
OPERATING INCOME | 320,517 | 176,828 | 143,689 | 81.26% | ||||
NONOPERATING INCOME (EXPENSE) | ||||||||
Nonoperating Income | 2,330 | 2,547 | (217) | -8.52% | ||||
Nonoperating Expenses | (8,972) | (1,132) | (7,840) | 692.58% | ||||
(6,642) | 1,415 | (8,057) | -569.40% | |||||
INCOME BEFORE TAXES ON INCOME | 313,875 | 178,243 | 135,632 | 76.09% | ||||
Social Contribution | (22,859) | (2,122) | (20,737) | 977.26% | ||||
Income Tax | (66,365) | (4,570) | (61,795) | 1352.18% | ||||
INCOME BEFORE EXTRAORDINARY ITEM AND NON- | ||||||||
CONTROLLING SHAREHOLDERS' INTEREST | ||||||||
224,651 | 171,551 | 53,100 | 30.95% | |||||
Non-Controlling Shareholders' Interest | (10,564) | (1,070) | (9,494) | 887.29% | ||||
Extraordinary Item net of Tax Effects | (8,078) | (8,078) | - | 0.00% | ||||
Reversal of Interest on Equity | 60,500 | 92,249 | (31,749) | -34.42% | ||||
NET INCOME (EXPENSE) | 266,509 | 254,652 | 11,857 | 4.66% | ||||
Page 21 of 22
Income Statement
(R$ thousands)
Consolidated | Variation | |||||||
4Q06 | 4Q05 | |||||||
OPERATING REVENUES | ||||||||
Eletricity Sales to Final Consumers | 880 | - | 880 | 100.00% | ||||
Eletricity Sales to Distributors | 141,168 | 112,403 | 28,765 | 25.59% | ||||
Other Operating Revenues | 1,849 | 3,698 | (1,849) | -50.00% | ||||
143,897 | 116,101 | 27,796 | 23.94% | |||||
DEDUCTIONS FROM OPERATING REVENUES | (780) | (11,672) | 10,892 | -93.32% | ||||
NET OPERATING REVENUES | 143,117 | 104,429 | 38,688 | 37.05% | ||||
COST OF ELETRIC ENERGY SERVICES | ||||||||
Eletricity Purchased for Resale | (3,876) | (2,177) | (1,699) | 78.04% | ||||
Eletricity Network Usage Charges | ||||||||
(2,621) | (997) | (1,624) | 162.89% | |||||
(6,497) | (3,174) | (3,323) | 104.69% | |||||
Operating Costs/Expenses | ||||||||
Personnel | (5,887) | (3,397) | (2,490) | 73.30% | ||||
Material | (577) | (199) | (378) | 189.95% | ||||
Outsourced Services | (6,266) | (5,525) | (741) | 13.41% | ||||
Other Operating Costs | (4,007) | (5,429) | 1,422 | -26.19% | ||||
Fuel Consumption Account - CCC | - | - | - | |||||
Energy Development Account - CDE | - | - | - | |||||
Employee Pension Plans | 47 | (294) | 341 | -115.99% | ||||
Depreciation and Amortization | (10,678) | (9,323) | (1,355) | 14.53% | ||||
Merged Goodwill Amortization | - | - | - | |||||
(27,368) | (24,167) | (3,201) | 13.25% | |||||
EBITDA | 119,659 | 86,664 | 32,995 | 38.07% | ||||
INCOME FROM ELETRIC ENERGY SERVICE | 109,252 | 77,088 | 32,164 | 41.72% | ||||
FINANCIAL INCOME (EXPENSE) | ||||||||
Financial Income | 5,074 | 14,427 | (9,353) | -64.83% | ||||
Financial Expenses | (40,468) | (47,431) | 6,963 | -14.68% | ||||
Interest on Equity | - | - | - | |||||
(35,394) | (33,004) | (2,390) | 7.24% | |||||
OPERATING INCOME | 73,858 | 44,084 | 29,774 | 67.54% | ||||
NONOPERATING INCOME (EXPENSE) | ||||||||
Nonoperating Income | 25 | 28 | (3) | -10.71% | ||||
Nonoperating Expenses | (249) | (69) | (180) | 260.87% | ||||
(224) | (41) | (183) | 446.34% | |||||
INCOME BEFORE TAXES ON INCOME | 73,634 | 44,043 | 29,591 | 67.19% | ||||
Social Contribution | (6,452) | (1,265) | (5,187) | 410.04% | ||||
Income Tax | (19,299) | (12,610) | (6,689) | 53.05% | ||||
INCOME BEFORE EXTRAORDINARY ITEM AND NON- | ||||||||
CONTROLLING SHAREHOLDERS' INTEREST | ||||||||
47,883 | 30,168 | 17,715 | 58.72% | |||||
Non-Controlling Shareholders' Interest | - | - | - | |||||
Extraordinary Item net of Tax Effects | (61) | (61) | - | 0.00% | ||||
Reversal of Interest on Equity | - | - | - | |||||
NET INCOME (EXPENSE) | 47,822 | 30,107 | 17,715 | 58.84% | ||||
Page 22 of 22
CPFL ENERGIA S.A.
| ||
|
By: | /S/
JOSÉ ANTONIO DE ALMEIDA FILIPPO
|
Name: Title: |
José Antonio de Almeida Filippo
Chief Financial Officer and Head of Investor Relations
|
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.